Today's stock market
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Banks led the market on rising interest rates, and the SPDR S&P Regional Banking ETF (KRE 1.67%) gained 0.8%. Healthcare stocks were weak; the Health Care Select Sector SPDR ETF (XLV 1.12%) gave up 0.4%.
As for individual stocks, Exelixis (EXEL 3.60%) soared on two positive news items about its lead cancer drug, and PG&E Corporation (PCG 2.60%) continued plunging on worries about its liability for huge fires in northern California.
Exelixis sees growing potential for cancer drug
Shares of mid-cap biotech Exelixis soared 17.2% after the company released a double dose of positive news about cancer drug Cabometyx. Exelixis announced that the FDA has granted priority review for the drug to be used as a first-line treatment for kidney cancer, and that a phase 3 trial proved that it improved survival rates for patients with liver cancer as well.
Cabometyx works by interfering with processes in cancer cells that lead to the formation of blood vessels, as well as the ability to spread and to resist drugs. It had already been approved in April 2016 as a treatment for advanced renal cell carcinoma in patients that had had prior anti-angiogenic therapy, but the priority review of the supplemental New Drug Application could lead to approval of the drug's use as a first-line treatment by the action date of Feb. 15, 2018.
The new indication for kidney cancer would open up the drug to 14,000 patients in the U.S. every year needing first-line treatment, and the drug trial results hold promise for the approximately 30,000 U.S. patients per year diagnosed with the most common form of liver cancer. Exelixis is growing fast, and savvy investors who bought Exelixis stock on a dip last month after an analyst downgrade are no doubt celebrating today's jump (and confirmation of the company's prospects).
Concerns about fire liability torch PG&E
PG&E stock was the biggest loser in the S&P 500 today, falling another 7.4% after plunging on Friday, following an announcement Thursday that the agency investigating the cause of the fires in California wine country is considering the possibility that the company's power poles played a role.
In a filing with the Securities and Exchange Commission, PG&E said that the California Department of Forestry and Fire Protection is conducting an investigation, and that it is "currently unknown whether the Utility would have any liability associated with these fires." The filing stated that the company has $800 million in liability insurance that would cover potential losses, but that any liability in excess of that amount may have a material effect on the utility's financial condition.
Local news outlets also reported that the California Public Utilities Commission has ordered PG&E to preserve and catalog all evidence relating to the fire, including downed power poles and failed conductors and equipment. The commission is also requiring the company to preserve all documents that potentially relate to the cause of the fire, such as tree-trimming and maintenance records.
The origin of the massive wildfires, still raging and having caused at least 40 deaths and the destruction of an estimated 5,700 structures, remains unknown. But the potential that high winds in the area around the time that the fire started caused contact between power lines and trees has observers concerned that any evidence of irregularity in PG&E's maintenance records could expose it to monumental lawsuits. The plunge in stock price shows that, for now, many investors wouldn't touch shares with a 40-foot pole.